Tag: functions of money

Questions Related to functions of money

Money is a standard of deferred payments. This means that:

economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

  1. Future transactions can be settled In terms of money

  2. Loans given and repayments thereof can be established in terms of money

  3. Both (a) and (b)

  4. Neither (a) nor (b)

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Correct Option: C

In 1979, As per RBI's New classification, M3 is known as ____________.

economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

  1. Narrow Money

  2. Broad Money

  3. Near Money

  4. Pure Money

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Correct Option: B

Which of the following will not be included under Narrow Money?

economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

  1. Currency in circulation

  2. Demand Deposits

  3. Time Deposits

  4. All of these

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Correct Option: C

As per RBI's new classification, which of the following measures of Money Stock includes Time Deposits with Banks?

economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

  1. M1

  2. M2

  3. M3

  4. Both (b) and (c)

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Correct Option: D

The basic distinction between narrow and broad money is the __________.

economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

  1. treatment of post office deposits

  2. treatment of time deposits of banks

  3. treatment of savings deposits of banks

  4. treatment of currency

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Correct Option: B
Explanation:

The basic distinction between the measurements of narrow and broad money is the treatment of time deposits of banks.
$\text{Broad money = Narrow money + Time deposits}$

Which of the following is not a necessary characteristic of money?

economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

  1. It is a unit of account

  2. It is a store of value

  3. It is of intrinsic value

  4. It is generally acceptable

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Correct Option: C

A vital function of money is its ability to provide a standard for __________.

economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

  1. difference in consumer's goods

  2. marginal utility

  3. deferred payments

  4. consumer's preference

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Correct Option: C

Money is said to be neutral when ______________.

economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

  1. changes in money supply do not have any effect on real sector

  2. changes in money supply leads to increase in national income

  3. changes in money supply lead to decrease in national income

  4. none of the above

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Correct Option: A

Which of the following is the important function of money?

economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

  1. Money must be legal lender

  2. Money must facilitate exchange if it is to fulfill its purpose

  3. A government must exist for money to exist

  4. None of the above

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Correct Option: B